You’ve heard that “location, location, location” is everything in choosing where to buy, but what if you’re not familiar with the country that you’re planning to invest in? Before we proceed, I personally think that it is very important to at least have some knowledge regarding the politics and policies of the country.
Japan is largely a safe, levels of corruption for business practices is low, and the country boasts excellent infrastructure. On the other hand, language barriers, a seemingly closed economy for such an advanced country, as well as natural disasters often make potential investors turn the other way.
Tokyo (I must emphasise Tokyo, not the whole of Japan) is a great choice for the risk adverse investor, where the main features are a steadily increasing population thus maintaining the already strong rental market, and the government has predicted that this growth will continue for the next 20 years. Tokyo also offers higher rental yield compared to countries like Singapore and Hong Kong.
So, how does one choose where to buy Tokyo? You might have heard of the 5 central wards, but prestigious addresses tend to offer lower rental yields. For example, brand new apartments located near Azabu Juban only offers a gross yield of around 3.33%, when average yields range from 3.4% to 5.4%. On the other hand, these prestigious addresses tend to keep their value very well.
The following 5 points will give you an idea of how to choose an apartment in Tokyo for investment, or even for your “My Home”:
1. Area Ranking
Let’s first take a look at the top 10 wards perceived to be perennially valuable in Tokyo.
- Minato-ku
- Chiyoda-ku
- Shibuya-ku
- Chuo-ku
- Meguro-ku
- Kawasaki-shi
- Shinagawa-ku
- Bunkyo-ku
- Shinjuku-ku
- Setagaya-ku
Zooming into the best stations for apartments that keep their value after 40:
- Hiroo (Tokyo Metro Hibiya Line)
- Omotesando (Tokyo Metro Ginza Line)
- Hanzomon (Tokyo Metro Hanzomon Line)
- Shirokanedai ((Toei Mita Line)
- Meguro (JR Yamanote Line)
- Shibuya (JR Yamanote Line)
- Yoyogiuehara (Odakyu Odawara Line)
- Shinagawa (JR Yamanote Line)
- Aoyama-itchome (Tokyo Metro Ginza Line)
- Kojimachi (Tokyo Metro Hibiya Line)
2. Conduct your own market research for your preferred area
It is vital that you get some market information regarding the area for the past 1-3 years. And to obtain results that are less skewed, it’s always good to find out for yourself recent market transactions in the area. We suggest REINS Market Information, a government website.
We understand that English information is not immediately available on hand, so if you’d like us to obtain raw data and provide language help, you can also drop us an message at
https://www.dualtap-international.co.jp/contact/contact.html for market information in your preferred area.
3. Market Price vs Asking Price
If you’re able to obtain past transacted prices for your property, it’s good to compare with asking price of active listings on the market. If you’re unable to find listings for the project that you’re interested in, try to find listings that are close to your target unit (size, year built, which floor, etc).
Since prices on listings are usually negotiable, comparing asking and transacted prices will give you a more accurate picture of the area’s market value.
Websites like SUUMO are very comprehensive and you will find a very active resale market there.
4. Pay attention to valuation prices, and how the valuation was conducted
Valuation is not an exact science, so depending on the company there may be differences in prices. When investigating the value of the apartment, find out how the price is justified. If your agent tells you something along the lines of “the assessed amount is high” but is unable to back up with evidence, it’s time to say goodbye to him or her.
5. Visit the project if you can
It sounds like something common sense, but in our experience there are quite a few buyers who buy into projects without visiting it. For some select new projects at sales seminars, air tickets may be provided as an incentive to attract buyers so do check with your agent.
6. Check out surrounding project launches
The timing of the sale is also important as sales is also affected by sale launches of surrounding projects. If there is a project launch for a large, luxurious condominium near the surrounding project, there is a possibility that prices may be affected and apartments may be sold at a higher price.
7. Ask questions when you visit
- How many visitors do you get
- How are the customers who visit like
- What is the booking status like
- Has anyone arranged to come back again
Questions like the above can help give you an idea how much demand there is and the likelihood of the current owner lowering prices. For new projects, it is not common practice for prices to be lowered.
8. How the building is managed and maintained
You want the value of your apartment to be maintained, so the competence of the building management association is very important. If the building is managed by a building company, try to find out if the management company managed by the same developer, as it is usually an indication that your apartment will be maintained better compared to a contracted company.
9. Finally, keep a cool head
The agent may tell you to commit quickly to your purchase by letting you know of other buyers who are interested in the property. That may be truly the case, and it really his the agent’s job to convince you, but I want to reiterate that it is very important to study past transactions of the area, as well as existing projects around the area. You might be able to find a better deal.
If you would like a non-obligatory, consultation, drop us an message and let us know your budget, where in Tokyo you’re interested in at
https://www.dualtap-international.co.jp/contact/contact.html and we’ll get back to you within one working day.